Bill Seeks to Help Low-Income Tenants Build Credit

During a recent hearing, the House Financial Services Subcommittee on Financial Institutions and Consumer Credit considered legislative proposals to help consumers, particularly those with low incomes, gain more access to mainstream banking and credit services. One of the proposals discussed was the “Credit Access and Inclusion Act of 2015” (H.R. 4172) that would allow owners, including public housing authorities (PHAs), and utility and telecom companies to report on-time payment data to credit reporting agencies, not just negative payment data. Introduced by Representatives Keith Ellison (D-MN) and Mike Fitzpatrick (R-PA), the bill seeks to help those with little to no credit build their credit scores based on a more comprehensive picture of their payment history.

Dr. Michael Turner of the Policy and Economic Research Council (PERC) explained that there are currently 54 million American “credit invisibles”—people who have no credit report or who have insufficient information to generate a credit score. Because of their credit invisibility, these individuals have more difficulty accessing affordable sources of mainstream credit and must rely on high cost lenders, such as check cashing and payday loan companies. Dr. Turner said that one study has shown that $3.4 billion is stripped from credit invisibles each year. Credit invisibles are overwhelmingly comprised of younger individuals, the elderly, people with low incomes, and members of minority communities.